Party of National Unity president Highvie Hamududu says the debt restructuring process will be useless if fiscal toxins entrenched in government systems are not dealt with by properly implementing austerity measures.
And Hamududu has urged government to engage China as an equal sovereign partner so that a win-win solution is arrived at during the debt restructuring process.
Hamududu told News Diggers! in an interview that without sealing the inefficiencies, international goodwill to relieve Zambia of its debt would be permanently squandered.
“While the need to restructure our huge debt is urgent, and government must rightfully consider options out of the problem, there are number of housekeeping fiscal disciplinary measures that must be actuated to seal the loopholes that brought about the debt crisis, in the first place. So debt restructuring that the government is seeking with China or any other partner must be preceded by clearly defined and implemented fiscal disciplinary measures to seal the long entrenched fiscal loopholes and general inefficiencies that currently exist in the public service,” Hamududu said.
He said seeking to restructure the debt would not solve Zambia’s debt challenges as the country would still fall back into unsustainable debt due to the presence of contaminators in the system.
“Seeking restructuring of the debt, plausible and inevitable as it may be, will not solve our country’s debt challenges, because even if the debt is favourably restructured, the country will sooner than later, fall back into unsustainable debt because the fiscal toxins that are entrenched in our government system will contaminate any debt relief. So before, sending a high powered delegation to China, let robust and far reaching fiscal and institutional reforms that should permanently seal the fiscal loopholes and inefficiencies be put in place, otherwise, the international goodwill to assist our country in debt relief will be permanently squandered, which can easily consign our economy in a dustbin of permanent failure,” Hamududu observed.
He emphasized the need to exhaust domestic solutions to the debt crisis before engaging China.
“There is no problem to begin preliminary talks about debt restructuring with China, but let our house be put in order before any debt restructuring deal is put in place as it will not stand the test of time. In addition, but more important, as a country, we must exhaust domestic solutions to our debt crisis, and there are many domestic options available, for example, partially privatise parastatals to create appetite for foreign direct investment into the country and raise additional budgetary resources in the process to address the long standing fiscal arrears and roll back the overall national debt. With such domestic efforts first, debt restructuring with China or IMF engagement becomes smoother and more credible,” he said.
And Hamududu warned government to engage China as an equal sovereign partner.
“The second aspect to the above warning; there is urgent need for government to engage Chinese authorities with a deliberate win-win attitude and formula so that Zambia does not continue to engage in unfavourable deals with China. Yes, China has the money and has been our long time ally, but engage China as equal sovereign partners and derive win-win dividends in our shared prosperity and future. East Asian emerging economies have demonstrated how to prosper with Chinese economic engagement. China is important economically for us, it has the easy money, huge market for our products and current epicentre for global manufacturing, but let us be wise as we engage with her,” said Hamududu.